Traditional financial services industry struggles to keep up with a changing world moving toward collaborative financial inclusion. Meanwhile, many remain underserved.
Part of the struggle comes from the “complete solution” model. For example, a large retail bank offers some customers multiple financial products. Others remain unbanked or underbanked.
Banks’ resources enable them to respond to customer’s needs on their own. There’s a “lone ranger” mindset. Despite billion-dollar budgets, however, going it alone many times doesn’t produce innovation.
Collaborative Financial Inclusion
Banks can learn much from other technology companies. Imagine if Apple wrote all iPhone apps itself and forbid market competitors. As innovative as Apple is, products would lack diversity. But companies at the forefront of technology, like Apple, operate more collaboratively increasing customer satisfaction.
Both Apple and Google understand the importance of other contributors. They embrace innovation. As a result, the App Store and Google Play which house thousands of applications serve multiple needs and interests. Application developers deliver creative apps loved by millions of customers.
Collaborative financial inclusion companies can do the same.
API’s Bring Exponential Growth to Financial Services
Dramatic changes in software technology over the past 40 years have resulted in collaboration and extensive growth through APIs (application programming interfaces–connecting related solutions). While companies earlier sought competitive advantage, they’ve moved toward open system models including the financial services industry.
Software programs now share functionality without duplicating expensive, time-consuming programming, accelerating integration. Years of development in years past is greatly reduced. Stripe and other financial players create APIs and open-source their platforms.
In collaborative financial inclusion, M-Pesa has published APIs for value-added service providers. Bitcoin’s advanced protocol now enables worldwide innovation.
Banks Help Underserved
Although banks were slow to restructure their business models, they’ve also becoming more collaborative. Banks continue changing, fostering innovator-partnerships to transform services helping the under-served.
Financial inclusion can’t happen in a vacuum. One idea spawns others. Exponential growth happens when many players add value, while building a community focused on a common purpose. As new products and services get introduced, banks expand collaborative financial inclusion in emerging markets.
This article is adapted from Financial Inclusion at the Bottom of the Pyramid by Carol Realini and Karl Mehta.
Read more by purchasing the book on Amazon.
